FICCI-KPMG-Report-13-FRAMES

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80 The power of a billion: Realizing the Indian dream © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Co-production treaties and international partnerships Hollywood studios embrace Indian co-productions India is emerging as a M&E hot spot for international studios. Realizing the growth prospect Hollywood studios such as Disney, Fox, Sony and Warner Brothers have entered into co-production deals and distribution deals with domestic production houses. Fox Star co-produced five films in 2012—‘Bol Bachchan’, ‘Jannat 2’, ‘Raaz 3’, ‘London Paris New York’ and ‘Ekk Deewana Tha’. Fox Star Hindi film line-up for 2013 includes Jolly LLB (co-production with Subhash Kapoor) and Murder 3 (a co-production with Mahesh and Mukesh Bhatt’s Vishesh Films). Viacom18 now distributes Paramount Pictures films in India, and is also producing Hindi films 68 . Hollywood studios performance 2012 Studio Number of releases Gross Box Office collections Sony Pix 12 INR 2.17 billion Disney 5 INR 0.91 billion Fox Star 11 INR 1.65 billion Warner Bros 15 INR 1.00 billion Source: ‘Life of Pi, Skyfall mark Hollywood’s increased box office share in India’, The Economic Times, February 2013 Co-productions between actors and studios Many actor-turned producers are tying up with large studios to share the cost of production and mitigate risk. For example, Akshay Kumar’s Grazing Goat Pictures partnered with Viacom18 Motion Pictures to co-produce ‘Oh My God’. Saif Ali Khan’s Illuminati Films also co-produced two films – ‘Cocktail’ and ‘Agent Vinod’ with Eros International Media. This works out to be a win-win situation for both the actorproducer and studios. Instead of charging acting fees, the actor-producer takes a pre-agreed share of profits. So, if a film earns profits, both the actor and the studio gain, and if it fails to perform well, the studio at least saves on the hefty cost of a star lead-actor. Co-production treaties among nations While India already had co-production treaties with Britain, Brazil, France, Germany, Italy and New Zealand, it signed co-production agreements with Poland 69 and Spain 70 in 2012 for audio-visual co-productions. Such co-productions help Indian film producers to raise the much-needed funds for film production. Onir and Sanjay Suri’s upcoming film ‘Chauranga’ sought international assistance from Europe. It received an investment of INR 1 million from Sweden’s Göteborg International Film Festival for developing the screenplay; and INR 15 million from German production house Pong for post-production work 71 . This is not the only one in league. The script of Anurag Kashyap Films’ upcoming release ‘Monsoon Shootout’ was developed by the British Film Institute which involved an investment of 68. ‘Viacom 18, PPI Announce Deal to Distribute Paramount Movies in India’, Hollywood Reporter, May 2011 69. ‘ India and Poland Sign Audio Visual Coproduction Agreement to Enhance Bilateral Cooperation in the Films Sector’, Pib.nic.in, July 2012 70. ‘India, Spain sign accord for movie co-production’, Business Standard, October 2012 71. Reeling Them In, Outlook Business, 03 March 2012 INR 5 million. The satellite rights for the film were pre-sold to French broadcaster Arte France for INR 15 million, and international distribution rights to film sales company Fortissimo Films. Dutch private equity investor Pardesi Films also invested in the project 72 . Foreign subsidies Many countries offer incentives on shooting in their land. This in turn promotes tourism and raises the tourist traffic into their country. Various tourism boards are increasingly pitching for locations to producers in India by offering subsidies, which can be as high as 40 percent of the cost of a film. These incentives range from tax rebates, free stays, visa facilitation, and in certain cases, can also share the cost of production. Cashing on the opportunity, Indian film makers are now trying to film in exotic locations. The Fiji government offers 47 percent tax rebate to fully funded overseas films being shot there 73 . Films such as ‘3G’and Anubhav Sinha’s ‘Warning’ have been recently filmed in Fiji. Lately, the German Federal Film Fund (DFFF) has allowed for 20 percent production subsidy on VFX (visual effects) works done in Germany 74 . South Africa offers 30 percent and Australia gives about 40 percent tax concession in Value Added Tax (VAT) refunds. Czech Republic offers 20 percent rebate to companies from abroad who employ local talent 75 . Further, Spain offers up to 20 percent rebate to filmmakers on their payments 75 . Following the success of Bollywood film ‘Zindagi Na Milegi Dobara’ which was filmed partly in Spain, the influx of Indian tourists to Spain has increased tremendously. There was a 65 percent increase in the number of visas issued for Indian tourists to Spain till August 2012 76 . Production houses and studios Grazing Goat Pictures and Viacom18 Motion Pictures Ajay Devgn Films and Viacom18 Motion Pictures Illuminati Films and Eros International Media Ajay Devgn Films and Shree Ashtavinayak Cinevision Akshay Kumar’s Hari Om Entertainment Company, Eros International and H.R. Musik Aamir Khan Productions and Excel Entertainment Source: Factiva Co-Productions (2012) Oh My God Son of Sardaar Agent Vinod Bol Bachchan Khiladi 786 Talaash Skill Development Both the government and industry have recognized the need for skill development programs for the film industry. Going forward the industry is expected to add programs and certification courses which contribute towards the honing skill of the sector. 72. ‘Independent film makers are turning to international co-production and crowdfunding to finance their projects’, Crowdsourcingindia.com, March 2012 73. ‘Fiji is new hotspot for Indian movies’, India.nydailynews.com, June 2012 74. http://www.variety.com/article/VR1118062531/ 75. ‘Bollywood goes abroad to cash in on subsidy’, Truthdrive.com, May 2012 76. ‘With eye on tourism, Spain woos Bollywood with tax-cuts, sops’, Business Line, September 2012
The power of a billion: Realizing the Indian dream 81 “ As an industry, our level of creative output can be raised significantly if there are more high quality well-run institutions focused on the cinematic arts. There is a dearth of formal training in most creative disciplines of filmmaking such as writing, editing, sound, production design, visual effects and so on. We have no dearth of talented individuals who are forced to learn completely on the job due to the lack of any structured training facilities for them to avail of. They are like diamonds in the rough, who with the help of some polishing and finishing can help the industry shine much brighter. “ Scan the QR code to hear more from Siddharth - Siddharth Roy Kapur Managing Director Studios, Dinsey UTV Media and Entertainment Skill Council: The government of India has identified M&E as one of the many industries which require training institutes. Accordingly under the National Skill Development Policy 2009, National Skill Development Council (NSDC) has constituted a Media and Entertainment Skill Council (MESC), which will focus on the television, print, films, radio, animation, gaming and advertising industries. Institutes focusing on technicians, stuntmen, spot boys and others employed in film industries will be set up. The skills council will be headed by actor Kamal Hassan. MESC will act as an accreditation body for the training programmes. It work closely with NSDC to train more than 11.7 million people over the next 10 years in skills such as lighting, scriptwriting, electric work and tailoring 77 . “ The Ministry of Human Resource and Development in Government of India and the State Government Education Ministries need to focus on education in the media and entertainment sector. United States has over 300 media universities and schools offering Degree or Master Degree and even doctorates. Right now media schools in India are only eligible to offer diplomas. Why can’t they have degree granting status? It will go a long way in not only attracting talented students but also boost the image of vocational education in the country. “ - Ravi Gupta Dean Whistling Woods International First school for ‘Film Curation’: Film Curation, also known as ‘film programming’, pertains to archiving, documenting, researching, contextualising and cataloguing films. It is now emerging as a field in film studies as there is a demand for trained professionals who have cross-disciplined knowledge of various aspects of cinema 77. Film biz to get 11.7m trained workers, The Times of India, 03 Oct 2012 78. ‘Films as Science’, The Indian Express, April 2012 79. Industry discussions by KPMG in India and who can select films for a festival in an informed manner. As a first step towards this, the Film and Television of India (FTII) organized a four-day course on film curation and is also planning to organize it every year. In addition, Dr Ambedkar University in Delhi has introduced a full-time course aimed at creating professionally-trained curators 78 . Multiplexes – slicing the audience and creating service differentiation Large formats 79 : After upgrading from single theatres to a multiplex environment, moviegoers in India can now advance to even larger cinema watching experience. International exhibitor, Cinépolis, will soon open its large multiplex format called Megaplex (mega multiplex) in India. Large format megaplexes allow for more titles to be played and for titles to stay in theatre for a longer first run. The 15-screen megaplex which will be launched in Pune is designed to have 3 Cinepolis VIP screens (a luxurious and ultra premium cinema experience) and 12 regular screens. The megaplex will run 75 shows per day or 1 new show every 10 minutes offering patrons with unprecedented choice of film titles and show timings. Average seating capacity is 180 seats. Cinepolis is opening more such megaplexes with 14 screens in Thane, 11 screens in Kochi and 10 screens in Ghaziabad soon. PVR also has an 11-screen multiplex in Bangalore, 9 screens each in Mumbai, Chandigarh and Kochi. However, not many exhibitors have invested in the megaplex format in India so far as it is very expensive to build and requires large investment due to high land cost and rentals. Also, industry is of the view that a 15 screen theatre would do well only in cities with multiple cultures or market for regional language films. Luxury entertainment: Movie goers have begun to appreciate luxury in entertainment. They are increasingly willing to pay INR700- INR1000 for a PVR’s Director Cut ticket or Big Cinema’s Ebony Lounge, as it offers a differentiated experience to them. It is not merely a luxury movie theatre, but is a complete package with grand auditoriums with 180 degree reclining chairs, a cafe, a restaurant-cum-bar, a lounge, a patisserie and a film-themed book shop. PVR has witnessed an encouraging response from patrons in Delhi region, and PVR plans to take this model to other key metro cities as well. Tapping the Bottom of the Pyramid through ‘Valueplexes’: As with many industries, the film industry has also recognized the immense potential posed by the audience which lies at the bottom of the pyramid. Almost 70 percent of India’s population lives in rural areas indicating a large untapped market 80 . Rural incomes are growing faster than urban incomes, with the low income group expected to shrink significantly, middle income group likely to go up to 500 million from the current 350 million people and the rich segment to expand to 150 milllion from 50 million 81 . The industry has begun to recognize the vast potential of this segment. United Mediaworks (UMW), for instance, has started Nukkad Entertainment, a chain of small-sized digital cinema halls targeting the lower-middle and lower-income groups 82 . 80. Census 2011 81. Preeti Mehra, “The rural income pyramid is morphing into a diamond,” Business Line, 82. ‘Dawn of ‘paisa vasool’ video parlours’, Business Standard, January 2013 © 2013 KPMG, an Indian Registered Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
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FICCI 2013 143 “ The Amendments t
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Acknowledgement We acknowledge the
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FICCI-KPMG-Report-13-FRAMES

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